A few weeks ago I presented at the American Society of Actuaries 4th Annual Tele-Underwriting seminar in Tampa, Florida (it rained).
Now for me, a Tele-underwriting nut, this was my return to Mecca, as the whole Tele phenomena started in the USA some 15 years ago. Indeed, when starting MorganAsh I visited several companies in the USA, pinching all their ideas.
Now the uncompromising Hank George, who was officiating the event, had informed me that MorganAsh was really good compared to a lot of American companies, but I still expected that I would learn a lot, both from the American life companies and some of the suppliers over there. I expected them to be making great progress.
However, I have to say I was stunned by how slowly they had moved. According to a study in 2007, approximately 75% of all Life companies in the USA use Tele-Interviewing.
Indeed it sounds like every company is increasing the amount of business they will use Tele on, and there are no reports of companies reducing the use of it.
This, you may say, is good progress. However, many are still only using it on a proportion of business, and only 50% of those using it have changed their medical limits, which means, they have still to realise its full benefits.
To put this in context, I know of no Life company in Ireland or the UK who is saying they will not be using Tele-Interviewing, with most having started and the remaining planning how to start, and it only started here some four years ago.
Every company I spoke to at the conference said they are going to increase the amount of business for which they use Tele, and no one said they were reducing the amount. So why, with the USA having at least a 10 year start on us, have they not progressed further?
The answer, unfortunately, seems to be a familiar combination of two issues:-
- Resistance to change
- Bridging the silos, i.e. cooperation of different departments or parties.
It seems in every circumstance there are familiar excuses to limit this innovation. You can take your pick from these few:
- The underwriters still order APS (APS is the equivalent of our GPR)
- The reinsurers have not changed the medical limits
- The reinsurers have not changed the reinsurance rates
- We still collect blood on everyone over $50,000
- We don’t use for higher sums assured
So will it be the same here in the UK and Ireland or will progress be quicker? There are some key differences to highlight here.
Firstly, the USA has some 1200 Life companies, where we have a far more select group. Secondly the competition is far more intense this side of the Atlantic and, thirdly, they all seem quite happy to draw blood for most applicants. It seems there is far less pressure for them to really improve than there is here.
It is my observation that we are progressing far quicker and, if my analysis of the difference in the markets is correct, then it will continue to do so. As an aside, Ireland has progressed quicker than the UK, primarily because, for a period, the doctors stopped providing their reports for insurers in a dispute over pricing which encouraged the Life companies to pioneer alternatives.
So what are the real reasons for not using Tele-Interviewing? The answer is there aren’t any. Oh – I hear you shout – “that’s ridiculous and you would say that” . Let me explain. I’m starting from a point where we know from experience that we have two big hurdles to cross; resistance to change and bridging the silos. As a result of these, the majority of people will start to cut down any initiatives to minimise the change to them personally and exhibit silo mentality.
One of my favourites is “consumers don’t know the intricate details of their treatments for cancer…. hence you can’t use a Tele-Interview.” To some degree this is true, but it is the answer to a different question of “do consumers know the full detail?” rather than "do they know if they have something wrong with them?” which in most cases is yes. Most people do know they have something wrong with them, although they may not know the full detail of the condition and its treatment.
So let’s accept that our industry is poor in adapting to change and recognise these “barriers” to innovation and progress. Let’s start to make strides in implementing innovations like Tele-Interviewing. When someone gives you the reason, why not check if this is purely resistance to change or failing to bridge the silo.
For the record there are only two reasons not to use Tele-Interviewing; if an interview in the applicant’s language is not available (i.e. for non-English speakers), or the applicant is deaf.
Andrew Gething is managing director at MorganAsh
The views expressed in this blog are those of the individual and not necessarily the company he represents.IFAonline
Nine in 10 do not have income protection
Set to become part of Single Financial Guidance Body
Also plan to scrap NI on contributions
Eight-week high against US dollar